1 Magnificent Vanguard ETF I'm Buying Hand Over Fist in 2025
Stocks have been soaring over the last two years since the latest bull market began, and now could be a fantastic opportunity to load up on new investments.
One of the simplest and easiest ways to generate wealth is to invest in exchange-traded funds (ETFs), which are bundles of securities grouped together into a single investment. ETFs make it far easier to build a well-diversified portfolio, and they require a fraction of the research involved in buying individual stocks.
Not all ETFs are created equal, though, and where you choose to buy will depend on your priorities. But if you're looking for a powerhouse fund that could help you earn above-average returns with less risk than many other types of investments, there's one ETF I'm loading up in 2025 and beyond: the Vanguard Growth ETF (NYSEMKT: VUG).
Why invest in a growth ETF?
Growth ETFs differ from broad-market funds, like S&P 500 ETFs, in that they're designed to beat the market over time. All of the stocks in a growth fund have the potential to earn above-average returns, and when you're investing in hundreds of these stocks at once, you can supercharge your earnings with little effort.
The Vanguard Growth ETF contains 182 stocks from various corners of the market. While 58% of the fund is allocated to stocks in the tech sector, it also includes stocks from industries ranging from consumer discretionary to healthcare to industrials and more.
^SPX data by YCharts
One advantage of this ETF over many other growth funds is its sheer size. The median market cap of stocks included in this fund is a staggering $1.4 trillion, with the largest holdings including industry juggernauts like Apple, Nvidia, Microsoft, and Amazon. In fact, those four stocks alone make up close to 40% of the entire fund.
Because this ETF is so heavily weighted toward large- and mega-cap stocks, it can help reduce your risk. Behemoth corporations like Apple and Microsoft may not experience the explosive gains like up-and-coming superstars, but they are far more likely to survive periods of market volatility.
That said, this fund still contains dozens of smaller stocks that do have the potential for serious growth. If even one of these stocks turns into the next Amazon or Nvidia, for example, it could take your portfolio to new heights. And because you don't need to worry about hand-selecting these stocks when you invest in an ETF, you can simply take advantage of those potential gains with practically zero effort.
How much could you earn with this investment?
Growth ETFs can be more unpredictable than broad-market funds, especially in the short term. So it's unclear exactly how this fund might perform in the coming months or years.
However, over the past 10 years, the Vanguard Growth ETF has earned an average rate of return of 15.60% per year, as of this writing. That's significantly higher than the stock market's historic average of around 10% per year.
Again, these types of investments can be more unpredictable than some other ETFs, so it's anyone's guess whether this ETF will keep up with these types of returns. Still, though, even slightly higher-than-average returns can boost your earnings by hundreds of thousands of dollars over time.
For example, say you're investing $200 per month in this ETF. Here's approximately what you could accumulate over time depending on whether you're earning 11%, 13%, or 15% average annual returns:
| Number of Years | Total Portfolio Value: 11% Avg. Annual Return | Total Portfolio Value: 13% Avg. Annual Return | Total Portfolio Value: 15% Avg. Annual Return |
|---|---|---|---|
| 20 | $154,000 | $194,000 | $246,000 |
| 25 | $275,000 | $373,000 | $511,000 |
| 30 | $478,000 | $704,000 | $1,043,000 |
Data source: Author's calculations via investor.gov.
Time is incredibly valuable when building wealth in the stock market, so the earlier you can get started investing, the easier it will be to accumulate hundreds of thousands of dollars or more. Even if this ETF isn't able to keep up with its 15% average annual returns going forward, you could still make a lot of money with enough time and consistency.
The Vanguard Growth ETF can be a smart option for those looking for a growth fund with a history of earning above-average returns with less risk than some other ETFs. By getting started early and keeping a long-term outlook, you could supercharge your savings with little to no effort.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Katie Brockman has positions in Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, Nvidia, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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